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SGX Nifty 13th July 2016
PLEASE NOTE THAT THIS IS MY OVERALL VIEW ON THE NIFTY AND THAT DOES NOT MEAN PRECISE ENTRY AND EXIT POINTS WILL BE MENTIONED IN THIS POST. IF YOU ARE TRADING ONLY ON THE BASIS OF THIS POST PLEASE USE APPROPRIATE RISK MANAGEMENT AND THEN ONLY TRADE. PLEASE DO NOT OVER TRADE.
SGX Nifty / Nifty Futures today continued rallying and touched 8525 spot Nifty levels. We did a mistake in analyzing the last part of the current on going diametric and we did issue some adjustments to our positions accordingly a few days back. We did take a partial hit during that process. Although our trade was not well managed we are very clear on our larger wave counts and we do see Nifty ending the rally that started on 29th Feb 2016. As per our analysis we expect the resumption of the bear market that started on 4th March 2015 from around 9119 levels. The current structure and the overall wave counts as per our analysis does not indicate any sign of a tezi / bullish cycle. We do not see or concur with rest of the market that Nifty is headed for new life time highs or we do not concur with most people on the street that this is a bull market playing out. If you are following or reading this please note that we are sharing our views here and that does not mean that I am God or I will never go wrong. The past 2 months are a testimony to my misreading of the final leg of the diametric and hence if you are following or trading based on our Nifty view then please note that you need to manage your own risk.
There are way too many danger signals in our systems that are consistently showing up signaling a massive bearish move to resume and during that move we will see significantly lower levels to enter into buying positions. The risk reward as per our analysis is not in favor of buying at this juncture, rather risk reward has not been in favor of buying for the past 300 points, buying had to be done at lower levels of 7300-6800 which we did and then booked out around 7900 levels. From a investors perspective we are now only long in a few select stocks and we do not see any sense in buying or trying to catch the on going rally as it is on a unsustainable trajectory. The Banking space looks very dangerous to us as the valuations in some of those stocks have almost reached within striking distance of Jan 2008 valuations. Everyone reading this will be aware what happened next after those valuations were reached. In addition of the valuations there are extreme divergences clearly visible on the charts and that too is a sign of resumption of the main trend that started on 4th March 2015. VIX index too shows extreme complacency as of now. Given the global back drop we do not see that VIX will remain where it is now for long and that in turn will also indicate a change in trend. Bond prices are another major indicator that we look at and that too is indicating that currently we are on a unsustainable trajectory. In the coming days we see a massive bear market to resume. Gold, Silver have given medium term breakouts and we did trade longs in Silver and make good money. The sharp rise in silver and Gold too are indicating that many in the smart money community are shifting asset allocation to metals. That too is a sign of risk off in the coming time.
Good Trading To You!